TiVo Inc. (
TIVO
)
recently announced that it is expanding its partnership with ONO,
the largest cable operator and a premier provider of broadband
communication and entertainment services in Spain. Under the terms
of the extended agreement, TiVo will now provide its services to
ONO's customers in Valencia.
To date, TiVo's services were solely available to ONO's
subscribers in Madrid and Barcelona. The extended partnership will
allow ONO subscribers to access high-definition (
HD
) and 3D video content along with digital video recording (
DVR
) services from TiVo. We believe that the extended availability of
TiVo services will boost subscriber growth going forward.
Most recently, TiVo also entered into a partnership with Pace, a
leading developer of technologies and services for the broadcast
and broadband industries. Per the agreement, Pace will install
TiVo's software in its set-top boxes and gateways. We believe that
the partnership will enable TiVo to expand its services in the U.K.
and France, as well as in the emerging markets of China and India,
where Pace has a strong presence.
Over the last couple of years, TiVo has been relying on
partnerships and strategic alliances to drive subscriber growth.
TiVo has a number of partnerships with major companies including
Comcast Corp. (
CMCSA
)
, Charter Communications, RCN, and Suddenlink. TiVo also expanded
its services globally through partnerships with ONO,
Virgin Media Inc. (
VMED
)
and Canal Digital (in Scandinavia).
These partnerships have helped TiVo to post strong fourth
quarter subscriber growth. Net subscription additions for the
quarter were 234,000 compared with 223,000 subscription losses in
the year-ago quarter. The solid subscriber growth enabled
TiVo to report earnings of 6 cents per share, much better than the
Zacks Consensus Estimate of a loss of 25 cents, as well as the
year-ago quarter loss of 30 cents. For further details please see
TiVo Sees Profit on More Users
.
Besides subscriber additions from these partnerships, TiVo is
also benefiting from back-to-back legal settlements with
AT&T Inc. (
T
)
,
DISH Network (
DISH
)
and
EchoStar Corp. (
SATS
)
. We believe that the out-of-court settlements recognize the value
of TiVo's intellectual property and provide incentive for companies
to enter into commercial arrangements with TiVo.
We believe that in addition to the immediate cash payoff, the
legal wins also open up major new markets and licensing
opportunities for TiVo. Recently, TiVo entered into a licensing
agreement with AT&T AdWorks LLC, a division of AT&T. The
agreement is expected to improve TiVo's rating service offerings
going forward.
Moreover, the settlements are expected to lower litigation
expenses that TiVo incurs every quarter owing to its ongoing patent
disputes.
We remain optimistic about TiVo's long-term growth potential due
to new partnerships, product launches and international expansion.
However, pending patent litigation issues, rising subscription
acquisition costs and higher R&D expenses are expected to
impact TiVo's profitability over the next few quarters.
Thus, we have a Neutral recommendation on TiVo over the long
term (6-12 months). Currently, TiVo has a Zacks #3 Rank, which
implies a Hold rating for the short term (1-3 months).
COMCAST CORP A (
CMCSA
): Free Stock Analysis Report
DISH NETWORK CP (
DISH
): Free Stock Analysis Report
ECHOSTAR CORP (
SATS
): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TIVO INC (TIVO): Free Stock Analysis Report
VIRGIN MEDIA (VMED): Free Stock Analysis Report
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